Business law Chapter 7

rebuttable presumption,

This presumption, known as a rebuttable presumption, can be challenged in court

• Capacity

one of the six elements of a contract, is the legal ability to enter a contract. • Capacity relates directly to the involvement of minors in contracts.

Contracts for Necessaries

• A minor is held responsible for the fair value of necessaries. • Necessaries, or necessities, include food, clothing, shelter, and medical care.

Disaffirming the Whole Contract

• A minor may not affirm parts of a contract that are favorable and disaffirm the unfavorable parts

abandoned

• A minor who marries or leaves home, giving up all rights to parental support, is considered emancipated and is said to have abandoned the protection afforded him or her as a minor.

minority.

• A person who has not yet reached majority is considered a minor and is still in his or her minority.

Ratification of Minor's Contracts

• After reaching the age of majority, a person can ratify, or approve, contracts made during minority.

Voidable Contracts

• Contracts made by minors are voidable by the minor. • This means that minors may disaffirm, or avoid, their contracts if they so choose. • To disaffirm a contract means to show the intent not to live up to the contract by a statement or some other act. • By permitting minors to have the privilege of disaffirming contracts, the law provides young people with a second chance when they use poor judgment.

Misrepresentation of Age

• If a minor claims to be over the age of majority, then he or she has committed fraud • Fraud is a wrongful act, and minors are responsible for their wrongful acts. • Some states allow the other party to sue a minor who has misrepresented his or her age for fraud. Other states do not. • However, it is illegal to lie about your age in order to buy age-restricted products, such as alcohol.

Returning the Merchandise

• If a minor still has the merchandise he or she received upon entering a contract, that merchandise must be returned when the contract is disaffirmed.

Legal Age

• In 1972 the voting age was lowered from 21 to 18. At this time many states lowered the age of majority from 21 to 18. • For many years, the age of majority was also the age at which a person could begin to buy alcoholic beverages. • Now, however, the age of majority is 18 nationwide, but most states have raised the legal drinking age to 21. • For legal purposes, people turn 18 at the beginning of the day before their 18th birthday.

Mentally Impaired Persons

• Mentally impaired persons also have the right to disaffirm contracts because they are considered unable to make sound judgments. • Before a guardian is appointed to look after the affairs of a mentally impaired person, his or her contracts are voidable

Other Contractual Capacity Rules

• Other classes of persons are also able to avoid contracts. o Mentally impaired persons o Intoxicated persons

Other Capacity Limitations

• Other classes of persons lack the capacity to enter into certain types of contracts. 1. Convicts—people convicted of a crime 2. Aliens-- people who are living in this country but owe their allegiance to another country 3. Enemy aliens--certain foreign-born persons designated as such during time of war

emancipated.

• Some states have declared that minors who are no longer under the control of their parents are emancipated .• This means they are responsible for their contracts.

majority.

• The age of legal adulthood is known as the age of majority.

Contracts of Minors

• The law shields minors when they make contracts to protect them from unscrupulous adults. Minors may be vulnerable because of o Immaturity o Lack of education o Inexperience o Being naïve

Special Statutory Rules

• There are many differences in state statutes regarding minors. • Minors should check the statutes of their own state to find out about special contractual capacities that they may be allowed.

Minor's Rights and Obligations

• When people enter into contracts, they are permitted by law to presume that the other party or parties have the capacity to contract. • The presumption of capacity plays a key role in contracts made by minors because the law permits minors, within certain limits, to rescind or void their contracts • The court has established specific standards regarding who is considered a minor and what the term minority means

Disaffirming Contracts Made with Other Minors

• When two minors enter into a contract with each other, both parties have the right to disaffirm the contract.